Amid heightened uncertainty stemming from the situation in the Middle East, Fitch Ratings is set to release on Friday its assessment of the Greek economy, concluding the first-quarter sovereign rating review cycle.
At the same time, Greece continues to make steady progress in further reducing its public debt. In mid-June this year, the country will proceed with another early repayment of the first bailout loan, amounting to 6.9 billion euros out of the 26.3 billion still outstanding. The remaining amount is expected to be covered through annual payments of approximately 5 billion euros over the next four years. As a result, public debt is expected to continue declining not only as a percentage of GDP, but also in absolute terms. According to the head of the Public Debt Management Agency (PDMA), Dimitris Tsakonas, Greece is projected to cease having the highest debt ratio in Europe by the end of 2026, with Italy expected to take its place.
Speaking at a conference organised by the Economic Chamber of Greece, Tsakonas outlined a timeline for the trajectory of Greek public debt in the coming years. As he stated:
By the end of the current decade, Greek public debt is expected to decline to between 113% and 115% of GDP, a level that would place the country in fourth or even fifth position among the most highly indebted EU member states, below France, Belgium and Italy.
During the 2032–2034 period, public debt is expected to continue its downward trajectory, reaching around 100% of GDP. He also estimated that during this period Greece’s sovereign credit rating could return to the “A” category.
It should be noted that Greece has so far secured stable assessments from major international rating agencies. Since 2019, the leading credit rating agencies — Fitch, Moody’s and S&P — as well as the two additional agencies recognized by the Eurosystem as external credit assessment institutions (Scope and Morningstar DBRS), have all upgraded Greece’s sovereign credit rating. These upgrades have been accompanied by a significant narrowing of the yield spread between Greek and German government bonds. They have also contributed to lowering borrowing costs for the Greek state, domestic banks and Greek businesses, thereby supporting stronger aggregate demand and economic activity across the Greek economy.
Ahead of Fitch’s forthcoming review of Greece, a recent report by the agency ranked the country among the European states — alongside Cyprus, Ireland, the Netherlands and Portugal — that theoretically possess the greatest fiscal space to respond effectively and avoid a sharp deterioration in debt and fiscal deficits.
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